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Holidays Came Early This Year for OncoMed and EnteroMedic

Bottom line, there is a chance the train can leave the station without you, but I believe if you sit on your hands and wait you will have an opportunity to buy shares under $2 soon. If you own shares now, you may want to consider taking some gains and repurchasing during a dip lower.

The top headline-capturing health care news was small-cap OncoMed Pharmaceuticals squeezing the daylights out of the 11% short interest when it opened higher by about 70% and continued to annihilate anyone who dared to stand in its path. TheStreet's Keris Alison Lahiff reported news of the price breakout Tuesday morning.

The company is partnering with $66 billion biotech giant Celgene (CELG), and it's reasonable to assume Tuesday's move is the first wave higher, although I wouldn't suggest chasing it. The companies will develop and market anti-cancer stem cell medicines. Celgene will have an exclusive option to license Demcizumab, its drug, if it wins regulatory approval. Demcizumab is in trials so investors shouldn't expect an immediate jump in revenue.

On the other hand, OncoMed will receive $177.25 million as an upfront payment from Celgene and Celgene agreed to purchase about 5% of OncoMed's stock. For OncoMed shareholders, the holidays arrived early this year. I think the stock has a lot of room to grow and $40 or more this time next year appears reasonable.

At the time of publication, Weinstein had no positions in securities mentioned.

Follow @RobertWeinstein

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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